Gilead Science Inc.’s ongoing attempt to recover part of the over $4 million it fronted for the legal defense of its former Immunomedics CFO, Usama Malik, has brought an ambiguous area of Delaware law into the spotlight. Malik had pleaded guilty to an insider trading charge last year, and as part of his plea agreement, two other charges—securities fraud and securities fraud conspiracy—were dismissed.
During a session on Monday, the chief judge of the Delaware Chancery Court acknowledged the complexity of determining how much of the advanced legal fees should be attributed to the dismissed charges versus the one Malik pleaded guilty to. This intricacy opens up a discourse on how Delaware law interprets fee advancement and indemnification for corporate executives in cases where only part of the charges result in convictions.
The situation stems from an incident where Malik’s girlfriend made $200,000 in stock sales after allegedly overhearing a confidential company call. Gilead had preemptively covered Malik’s legal expenses to defend against the federal allegations, a move that corporations often take to protect their executives until proven guilty. Now, the question remains whether, and to what extent, Gilead can reclaim those funds.
For a detailed report, you can access the full article on Bloomberg Law.